New Delhi: Former Finance Secretary Subhash Chandra Garg on Wednesday said the government should offer a one-time settlement scheme to the telecom companies to pay the principal due amount as per the AGR definition and waive the penal interest and penalties.
The massive Rs 1.47 lakh crore of adjusted gross revenue (AGR) dues are pushing telecom firms to the brink.
In a blog titled 'Rebuilding Telecom Business in India', Garg said the telecom crisis in India is not just limited to AGR-related issues.
"Offer a one-time settlement scheme to the telecom companies (both operating and under resolution) to pay the principal due amount as per the AGR definition as contained in the licensing agreements and waive the penal interest and penalties."
"Alternatively, appoint a board for Vodafone Idea Ltd by ousting the current board on the lines of action taken in the case of IL&FS and DHFL and secure a moratorium of some time on servicing of loans and government dues," he said.
Read more:AGR Issue: Know from where it all started
Garg noted that the telecom business -- both voice and data -- is headed towards becoming a duopoly (Jio and Airtel) with the remaining two players, Vodafone Idea and BSNL-MTNL, hurtling towards eventual shutdown, which might as well be an abrupt collapse.
"This has enormous consequences for over 400 million of the customers of Vodafone Idea and BSNL-MTNL in terms of continuous availability of telecom services and also for competitiveness in the industry itself," he said.
Garg also wondered whether the government's proposal to put in billions of dollars (over Rs 70,000 crore) to revive BSNL-MTNL is advisable or not as the country is facing massive economic slowdown.
The Supreme Court last week rejected a plea by telecom firms including Bharti Airtel and Vodafone Idea Ltd for extension in the payment schedule and asked them to deposit an estimated Rs 1.47 lakh crore in past dues for spectrum and licenses by March 17.
Some telecom firms have said they were already struggling with mounting losses and debt and the additional liability has raised concerns of them defaulting on existing loans.
Government mulls setting up telecom fund
The government is considering setting up of a fund to facilitate operations of telcos post the payment of their AGR dues.
According to sources in the know, the dues which have to be paid to the Department of Telecom (DoT) would have to be put in the telecom fund, and can then be lent to the companies with lower interest.
This will allow companies to maintain their going concern status and continue operations without running to banks to raise funds.
With the sector in trouble, none of the banks would also be ready to lend to telcos so the fund would act as critical funding support. The telecom fund is likely to help telcos manage their cash flows and would be fiscally neutral for the government.
Earlier on Wednesday, Bharti Airtel chief Sunil Mittal and Vodafone Idea Chairman Kumar Mangalam Birla met Finance Minister Nirmala Sitharaman to apprise her on the current stressed state of affairs in the telecom sector due to the huge AGR payment demand and are learnt to have sought relief for sustenance.
(PTI and IANS Report)
